Legal View: Combative lips sink ships

By Ted Streuli The Daily Record Newswire Bullies clothe themselves in neither a mantle of compromise nor a cloak of fairness. Their interest is limited to their own perceived betterment, no matter the detriment to others. They are a disruptive force, laying waste to the peaceful progression of orderly society. Set aside, if you can, the caterwauling of commentators and congressmen that ceaselessly clutters your ear and distracts your intellect. The party that has built its reputation by being the champion of business is fractured, and the piece that has broken off is taking your lunch money. It is clear now that Standard and Poor's downgrade of America's creditworthiness had nothing to do with our ability to meet financial obligations now or in the future; it had everything to do with our potential unwillingness to meet them. In a written statement about the rating change from AAA to AA+, S&P said: "More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned." The predictability of policymaking was cloudless for a century as Congress routinely raised the debt ceiling with minimal fanfare. This year, tea party-backed lawmakers opted for a near-calamitous game of brinksmanship akin to a testosterone-laden sophomore bullying a classmate into a lethal round of chicken. Their crowing suggests federal spending ran amok in the past 20 months and doomsday lingers in the next doorway, prepared to leap upon us unless we immediately cut up Washington's MasterCard. All they accomplished was tossing our credit rating into the harbor. In the ripples, we are today paying a lower interest rate on Treasury bills than we were before the Aug. 5 downgrade; the long-term composite rate on Aug. 1 was 3.61 percent; on Aug. 8 it was down to 3.21 percent. The government is not paying a penalty for the status change. The negative effect instead arrived as a stock market belly-flop, wherein the value of American businesses on Monday depreciated $1 trillion. And losing value is not good for business. Democrats and Republicans have, historically, reached agreements that balanced societal well-being with economic growth. But the tea party anomaly threatens to unhinge the pendulum entirely, and that is the menace that caused S&P to lower our rating. Beyond the impassioned speeches there are interesting statistics. With the dollars adjusted for inflation, the last Republican president to oversee a deficit reduction was Dwight D. Eisenhower. Since then, the only administrations to see a smaller deficit during their White House tenure were those of Johnson, Carter, Clinton and Obama. Blindly cutting taxes hurts business. Companies need public infrastructure, protection and education services, and no recession here or abroad has been brought to an end with lower taxes; the only proven solution to a recession is some form of public spending. Once, the wealthy made their money in bonds and inflation was a bad word. No more. Today wealth comes from jobs with leviathan compensation packages and the stock market, so economic growth is the ally, recession the enemy. Democrats and Republicans have always argued their way to equilibrium, each confident the other wasn't interested in sinking the ship. We are faced now with a faction that is worse than ambivalent. They are rooting for the iceberg. Published: Mon, Aug 15, 2011